Many of us have been brought up with the adage, “It is more blessed to give than to receive.” I was raised in a household where my parents committed around 10% of their income to the church, instilling in me the value of giving back. The concept of regularly contributing a portion of my earnings to charity was a tangible way to show gratitude for the blessings in my life.
Traditionally, when we consider charitable giving, our minds gravitate towards cash donations, and we overlook the possibility of giving appreciated assets. In our series, “Five Ways to Be Generous Before Year-End,” this article explores the opportunity of giving appreciated assets. Surprisingly, according to JPMorgan’s Guide to the Markets, while approximately 8% of household wealth exists in cash, the vast majority—92%—comprises real estate, business ownership, retirement accounts, liquid investments, and other assets. Yet, studies have shown that a striking 85% of charitable giving is conducted solely through cash donations.
Last week, Charlie illuminated the benefits of giving appreciated assets in our blog post. This form of generosity not only offers a current-year tax deduction based on the asset’s fair market value but also eliminates capital gains tax upon the sale of the asset.
Opting to donate appreciated real estate or business interests can yield significant tax advantages compared to selling the assets and subsequently donating the proceeds. However, these transactions entail complexity beyond the realm of cash donations or even the gifting of appreciated securities, stocks, mutual funds, or ETFs. The decision-making process and logistics often need several months or more for completion. So, initiating this process well in advance of any anticipated sale of real estate or business interest is crucial.
Given the intricacies involved, partnering with a charity experienced in handling complex gifts is paramount. It is also essential to collaborate with legal professionals well-versed in navigating these transactions to mitigate the risk of IRS scrutiny. At Master’s, our team has established relationships with both local and national professionals who excel in facilitating complex charitable gifts.
If the idea of exploring resources beyond available cash appeals to you, our team at Master’s is ready to investigate whether a complex charitable gift aligns with your objectives. The impact of a significant asset donation might be immeasurable but could substantially transform your life and the lives of many others impacted by your generosity.
Let us all bear witness to the age-old wisdom that indeed, it is more blessed to give than to receive.